Monday, April 29, 2013

Life quality across structural change

Periods of rapid structural change are particularly likely to lead to decline in the quality of life of some sections of the affected population. Change creates winners and losers; and it is common that the gains and losses are channeled into very distinct groups of people. This is true during periods of large-scale migration, technology change, and structural change within an economy. Important components of life quality include health, nutrition, education, economic wellbeing, economic security, and security from violence and coercion. Each of these properties is affected by several important dimensions of social life:

legal and political institutions

institutions of economic production and distribution

economic opportunities and income

public provision of income supplements

public provision of food subsidies

public provision of health care resources

household support provided by family and community

When a society's governmental and economic institutions are enmeshed in a period of rapid change, many of the components of life quality are likely to be affected -- positively or negatively. The basic institutions of a society determine the value of the private and public assets individuals and households control on the basis of which to support their pursuit of a decent life; this is what Amartya Sen refers to as "entitlement bundles". (Sen applies his entitlement theory to the study of famine in Poverty and Famines: An Essay on Entitlement and Deprivation; link.) And shifts in the composition of the entitlement bundle are likely to lead to abrupt worsening of the conditions of the least-well-off.

For example: It is likely that the austerity policies of the Spanish or Greek governments will have a negative effect on the health and nutritional status of the bottom half of those societies. Working people will have lower incomes and they will have reduced access to the social safety net; health status is likely to decline. As another example: Life expectancy in the former Soviet Union declined measurably following the collapse of the Soviet system (link). One part of that decline was the disappearance of the social security net created by state-owned industry -- the smashing of the "iron rice bowl".

This concern is particularly relevant in the context of the rural-urban transformation currently underway in China. Since 1980 China's rural sector has been subject to at least two major kinds of structural change. One has to do with the economic and political institutions that governed daily life for rural households, from communes to market institutions. And the other has to do with the rapid structural transformation of China's economy from agriculture to export-led manufacturing. The first set of changes led to a withdrawal of forms of "social insurance" that had been associated with the commune system, including healthcare and old-age care. The second has led to mass migration of younger workers from villages and towns to factories in cities. This migration leaves the remaining population in the countryside older, poorer, and less economically secure.

These observations have several important implications. Foremost among these is the crucial importance of maintaining effective systems for monitoring and measuring life quality across the society. It is important to have good measures of health status, nutritional status, educational status, and old age life quality across regions and sub-populations. So national governments need to create and fund the social research activities necessary to measure health and other quality of life properties across the population. (Here is a recent post on a spatial study of quality of life in China based on 1982 data; link.) Sen argues that it was the availability or lack of availability of information about famine conditions that explained the difference in outcomes between China during the Great Leap Forward and post-independence India; Poverty and Famines: An Essay on Entitlement and Deprivation.

Second, when it turns out that there are large numbers of "losers" in a large social process of change, it is important for the state and non-governmental actors to find institutions and resources that will help to improve their outcomes. "Winners" need to help to fund the amelioration of harms created by the processes that led to their gains. If NAFTA led to the increase of overall national income for Canada, Mexico, and the United States, but also led to the displacement of workers in a significant set of industries -- then it makes sense to tax part of those gains to compensate the losers. And in fact, the NAFTA agreements were premised on such compensation, though this has not occurred reliably (link). This means redistribution across sectors and regions; and it is justified by the fact that the overall gains created by the transformation would not have been possible without imposing these losses on the disadvantaged sector or region.

What might this kind of redistributive policy look like in the context of China's rural-to-urban transformation? It would seem that public moneys will be needed for several types of problems:

Maintenance of income and quality of life and health for the elderly

Investments that increase the productivity of labor and the level of employment in rural areas

Investments that work to ameliorate the negative environmental effects of rapid change

Investments in the institutions of public health -- clinics, hospitals, and medical personnel

It might be asked, "Why should developing nations concern themselves with this issue?" There are several answers. Basic justice and fairness entails that the wealth of a society should be distributed in ways that allow all segments of society to improve their quality of life and wellbeing. A society's wealth and income is a joint product of its entire population; so fairness dictates that everyone should benefit from improvements in productivity. But prudence lines up with this answer as well. A society that ignores the widening of the gaps between rich and poor, and does not concern itself about improving the wellbeing of the poor, is likely to suffer a rising level of social strife as well. It can either go the route of creating gated communities for the rich, or it can use its resources to create fair life outcomes and fair access to opportunity for all its people. Everyone is better off in the long run with the second choice.

In The Paradox Of Wealth And Poverty: Mapping The Ethical Dilemmas Of Global Development I argued that a developing nation should choose an economic development strategy that spreads the benefits of growth over a broader population, over a strategy with a higher growth rate but with substantially greater inequality. I still think this is the right answer to the question. And this approach has the best likelihood of improving the quality of life of the poorest segment of society. The graphs below make the case based on three stylized strategies:

NL neo-liberal growth: choose those policies and institutional reforms that lead to the most rapid growth: unfettered markets, profit-maximizing firms, minimal redistribution of in­come and wealth

PF poverty-first growth: choose those policies and institutional reforms that lead to economic growth favorable to the most rapid growth in the incomes flowing to the poorest 2 quintiles

WF immediate welfare improvement: direct as much social wealth as possible into programs that immediately improve the welfare of the poor (education, health, food subsidies, housing subsidies)

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About Me

I am a philosopher of social science with a strong interest in Asia. I
have written books on social explanation, Marx, late imperial China,
the philosophy of history, and the ethics of economic development.
Topics having to do with racial justice in the United States have become
increasingly important to me in recent years. All these topics involve
the complexities of social life and social change. I have come to see
that understanding social processes is in many ways more difficult than
understanding the natural world. Take the traditional dichotomy between
structure and agency as an example. It turns out that social actions
and social structures are reciprocal and inseparable. As Marx believed,
“people make their own histories, but not in circumstances of their own
choosing.” So we cannot draw a sharp separation between social structure
and social agency. I think philosophers need to interact seriously and
extensively with working social researchers and theorists if they are to
be able to help achieve a better understanding the social world.

Open source philosophy

Since 2007 this site addresses a series of topics in the philosophy of social science. What is involved in "understanding society"? The blog is an experiment in thinking, one idea at a time. Look at it as "open-source philosophy" -- a web-based, dynamic monograph on the philosophy of social science and some foundational issues about the nature of the social world.

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